Friday, August 31, 2012

“We are confronted by the most unusual set of circumstances that I
have experienced in my lifetime,” said Henry Kaufman, the fabled Wall
Street economist best known by his Cassandra-like nickname, Dr. Doom.
“We are in no man’s land when it comes to economic policies to get the
U.S. and Japan out of their doldrums.” Kaufman’s tone and watery eyes
seemed to reflect a genuine sadness that no “economic thinker” has
emerged who can galvanize our collective imaginations and show us the
way out.

I was with good reason sitting in Dr. Kaufman’s Madison Avenue rooms,
home to both his private family office and his public consulting firm,
Henry Kaufman & Co. Some days it feels to me as if Eeyore on
Adderall has gained control of America’s newsroom. If I am to be
depressed, I decided, let me at least be melancholic with the best in
the business. That seemed eminently more Penta’s style.

So I respectfully paid Dr. Kaufman a visit, taking my seat before a
work by the American painter, Philip Howard Evergood. In this
Depression-era painting, One Meatball, an emaciated diner in a
restaurant eats a single meatball as a waiter in the background clutches
his head in a way reminiscent of Edvard Munch’s The Scream.

The mood was suitably set, in short, when the good doctor came
through the door. For those whose memories don’t go back that far, Henry
Kaufman made his name as the late Salomon Brothers’ chief economic
thinker, his sober pronouncements hugely affecting bond markets and
economic policy in the 1970s and 1980s. His gift: He delivers bad news
in such a clear-eyed and erudite way that the bitter pills slide easily
down the gullet, so different from the pipe-burning bromides pushed by
the shrieking hairdos of television.

The courtly economist who fled Germany in the 1930s and still has a
slight accent, obligingly ran down the nature of the globe’s festering
malady. “There is a halo around the emerging nations that is not
deserved,” he said. “China isn’t working. India has significant
problems.”

Europe, Japan—the doctor’s litany of infectious diseases ran on. We
have a “subdued economic recovery” in the U.S. where only “100 or so
large companies” are cash-rich. Small and medium-size companies, the
backbone of the economy, have little “access to credit.” Even the good
news—historically low interest rates—is in Dr. Kaufman’s narrative the
woeful story of an opportunity lost. “Few investors have benefited from
this steep decline in interest rates,” he said....MORE

The headline is from Minyanville, the story is from the Globe and Mail:

Police probing Quebec maple syrup heist worth up to $30-million

Quebec police are on the hunt for a sticky-fingered
thief after millions of dollars of maple syrup vanished from a Quebec
warehouse.

The theft was discovered during a routine
inventory check last week at the St-Louis-de-Blandford warehouse, where
the syrup is being held temporarily. The Federation of Quebec Maple
Syrup Producers, which is responsible for the global strategic maple
syrup reserve, initially kept the news quiet, hoping it would help
police solve the crime quickly.

About 10 million pounds of syrup was stored at the site, at a value of more than $30-million.

Anne-Marie
Granger Godbout, executive director of the federation, said the
organization is still trying to determine how much is missing and
declined to offer an estimate. But a spokesman from the Sureté du Québec
said the loss was significant.

“We know that it’s millions of dollars that was stolen,” said Sergeant Richard Gagné. “It’s a very large amount.”

All of the maple syrup inventories are fully insured, according to the federation, so there will be no loss to producers.

Ms.
Granger Godbout said the theft shouldn’t put the global supply of maple
syrup at risk, but warned it could allow the thief to undercut
legitimate producers. The federation represents about 10,000 maple syrup
producers in Quebec. “Obviously those people stole the maple syrup to
sell it somewhere,” she said. “If it’s a big volume, it could be very
harmful for the maple syrup industry. The companies that are working in
this industry will have to compete with some company that didn’t pay for
the maple syrup.”...MORE

Thanks to a reader.
From Reuters, Aug. 13:Africa's pirates have demands - and letterhead, too

Welcome to the Pirate Action Group.
Pirate commander Jamal wishes to congratulate you on being
hijacked. Kindly speak to his negotiator about your ransom,
bearing in mind that his demands are similar for every vessel he
seizes.

This is not an absurd joke -- this is how the pirates of the
African coast do business, and it's a serious matter for the
companies that have to pay out.

In 2011 Somali piracy cost the world economy $7 billion and
earned the pirates some $160 million in ransoms, according to a
recent report by the International Maritime Bureau.

Piracy is receding of late, but it is still a threat. The
maritime bureau reported 69 hijacking incidents by Somali
pirates between Jan. 1 and July 12, down 32 percent from last
year.

Rogues though they may be, these pirates in many cases are
surprisingly well-organized, down to having their own packets of
paperwork -- on letterhead -- for their victims.

Reuters obtained a copy of one such packet, presented to the
owner of a hijacked oil tanker and the owner's insurer after the
ship was taken. Due to the commercial sensitivities, the names
of the insurer and ship owner were redacted from the document,
as was the size of the ransom request.

But what remains is colorful enough, and somewhat
surprising. The cover sheet, in memo format, is addressed "To
Whom It May Concern" with the subject line "Congratulations to
the Company/Owner."

"Having seen when my Pirate Action Group (P.A.G) had
controlled over your valuable vessel we are saying to you
Company/Owner welcome to Jamal's Pirate Action Group (J.P.A.G)
and you have to follow by our law to return back your vessel and
crew safely," the memo begins.

The tone of the memo belies the violent reality of the
pirate's actions. As of early August armed Somali pirates hold
more than 170 hostages, according to the IMB, and were
responsible for 35 deaths in 2011 alone.

"Do not imagine that we are making to you intimidation," the
memo says, before signing off with "Best regards" and the
signature of Jamal Faahiye Culusow, the General Commander of the
Group....MORE

As the military-chronicling site Strategy Page reports, times are tough for Somali pirates.
The last ship they took was a fishing boat on June 19, and the last
attack on June 25 was thwarted. According to Berkowitz's report, "the
maritime bureau reported 69 hijacking incidents by Somali pirates
between Jan. 1 and July 12, down 32 percent from last year." So pirates
need to make the most of the ships they capture, and the letterhead
helps them do that by professionalizing the process....MORE

..."Anyone who helps the Mujahideen find the whereabouts of Obama and
Hillary Clinton will be rewarded with 10 Camels to the information
leading to Obama and 10 hens and 10 cocks for Hillary," said senior
Shabaab commander Fuad Mohamed Khalaf in a statement reported on numerous websites....

We gave you guys some exclusive information about the opening of ‘Antilia‘,India,
the world’s priciest private residence owned by the world’s fifth
richest man, Mr. Mukesh Ambani. Now, for some inside information about
the house, we bring to you some amazing pictures of the interior of the
27-storey home.

It all started when Mrs. Nita Ambani (wife of Mukesh Ambani) was
relaxing at a spa at the Mandarin Hotel, New York, the Asian interiors
struck her and she inquired about the desinger. And so they consulted
rchitecture firms Perkins + Will and Hirsch Bedner Associates, the
designers behind the Mandarin Oriental, based in Dallas and Los Angeles,
respectively.

And what’s the most unique feature of the entire house,if you may ask? Well, the Ambani house differs in the fact that no two floors
are similar in either plans or materials used. At the request of Nita
Ambani, say the designers, if a metal, wood or crystal is part of the
ninth-floor design ,
it shouldn’t be used on the eleventh floor, for example. The idea is to
blend styles and architectural elements so spaces give the feel of
consistency, but without repetition.

Mrs.Ambani also took alot of interest in the crockery of the house. We told you how she went all the way to Sri Lanka for crockery shopping.

And now, for some information about each room:

Ballroom:

Antilia Ballroom

80% of the ceiling of the Antilia ballroom will be taken up by crystal chandeliers.
The royal staircase will lead to a central landing. It features a
retractable showcase for pieces of art, a mount of LCD monitors and
embedded speakers, as well as stages for entertainment. The hall opens
to an indoor/outdoor bar, green rooms, powder rooms and allows access to
a nearby “entourage room” for security guards and assistants to relax.

The Antilia house is a mix of several features seen worldwide
however, all the features have a distinct Indian feel to them. The
Gingko-leaf design sink is a good example of this. Native to India, the
leaves in the sinks are shaped in such a way that their stems guide
water into the bowl created by the basket of the leaf....MORE

Please do not take the following list as an endorsement or recommendation.
We prefer directional bets using options on futures.

Just kidding.

9.8:1 leverage on your initial futures margin should be enough for anyone.
(unless you have a corner, in which case drop us a line)

From Zacks via NASDAQ:

Types of Natural Gas ETFs
Natural gas ETFs are divided in two categories:
futures
and
equity
-based ETFs. Both of these will be detailed for investors looking
to play in this increasingly important energy market segment:

Future-Based Natural Gas ETFsUnited StatesNatural Gas Fund (UNG)
Investors seeking direct exposure to the natural gas, a key fuel
source for power plants, may find UNG an attractive option. It is
the most popular and most liquid ETF, trading in about more than 10
million shares per day. Launched in April 2007, the fund has so far
attracted assets of $1.2 billion (Read:
Ten Biggest U.S. Equity Market ETFs
).

The product looks to track the changes in percentage terms of
the price of natural gas futures contracts that are traded on
NYMEX. The fund takes positions in the near month futures contracts
on expiry and rolls over to the next month futures contracts. As
the prices of next month futures contracts exceed that of the near
month futures contracts (also called "contango"), the fund loses on
rolling making strong long term performances very weak.

iPath Dow Jones-UBS Natural Gas ETN (GAZ)
The ETN seeks to match the performance of the Dow Jones-UBS
Natural Gas Total Return Sub-Index. This represents a benchmark of
the commodity of natural gas, a critical fuel for heating and
cooling across the United States. The product is highly traded with
a solid volume of more than 400,000 shares a day although it has
just $51.6 million in AUM.

The product was launched in October 2007 and in August of 2009,
Barclays had suspended fresh issuance in GAZ. This had given ETN a
push to the higher premiums. Once this happened, the premium
reached to unprecedented levels of nearly 134%, one of the highest
that investors have ever seen in the space. This massive premium
has begun to recede in recent months and is now 'only'
50%.

Due to the heavy fluctuations in the premium, this ETN is the
most volatile fund making it a risky play. The fund lost around 11%
year-to-date and charges 75 bps in fees per year.

United States12 Month Natural Gas Fund (UNL)
Investors seeking direct exposure to the natural gas market may
also play with this fund. Unlike UNG which only holds next-month
contracts, this ETF spreads its exposure across the maturity curve.
In fact, the fund consists of 12 natural gas futures contracts
consisting of the near month security as well as the next eleven
months (See more ETFs in the
Zacks ETF
Center
).

This approach can help cut down on contango because only 1/12th
of the portfolio is rolled at any one time and a month of heavy
contango will only impact a small portion of the holdings.
Similarly, the fund will benefit less from backwardation (the price
of near-month futures contracts exceeds that of the next month
contract). As a result, this balances the negative effects of
contango and positive effects of backwardation better than most
products.

Despite this feature, the ETF trades in small volumes of less
than 56,000 shares per day and lost around 16% year-to-date (Read:
Three Unlucky Equity ETFs
). Launched in November 2009, the fund has attracted assets of
$43.8 million and charges 75 bps in fees per year from
investors.

E-TRACS Natural Gas Futures Contango ETN (GASZ)
Launched in June 2011, the ETN seeks to match the performance of
the ISE Natural Gas Futures Spread Index. The fund takes short
positions in the near-term month natural gas futures contracts and
long positions in the mid-term futures contracts through a series
of investments in natural gas sub-indices. As mid-term futures
contracts are priced at higher prices than the near-term futures
contracts, the fund capitalizes on the price differences due to an
upward sloping futures curve.

With AUM of $11.1 million, the product is less volatile and
trades in small volumes say nearly 13,000 per share on a daily
basis. The fund seems to be costly relative to other ETFs in the
space, charging investors a fee of 85 bps annually, as it does
arguably have a more advanced strategy. Unlike other natural gas
ETFs, GASZ generated returns of more than 1% year-to-date in the
current turmoil

Teucrium Natural Gas Fund (NAGS)
Launched in February 2011, this fund seeks a new way to play the
natural gas market and reduces the effects of both contango and
backwardation. Unlike UNG, the product spreads out exposure across
multiple points on the curve.

The product invests in futures contracts in the nearest to spot
month for the following four periods - March, April, October, and
November. All four months are weighted equally giving the fund a
balanced exposure across these key delivery dates. These four were
chosen in particular because they give the fund a focus on the key
times in the natural gas season at both the end and beginning of
the heating and cooling seasons.

The fund has so far attracted assets of $3.7 million and trades
in a tiny volume of less than 4,000 shares per day. It is a high
cost choice in the space charging about 1.54% in annual fees.
Despite its advanced features, the ETF declined nearly 10% this
year to date....MORE

Sometimes I wonder if the market understands just how bad CHK's cash-flow really is.
The stock is trading at $19.54 up fiddy cent, last.

From Bloomberg:

Donna Thornton made sure to include
a no-cost provision in her contract with Chesapeake Energy Corp. (CHK)
that let the driller harvest natural gas beneath 2.5 acres of
her property in Louisiana.

Thinking she had excluded production and marketing expenses
and would therefore secure higher royalty payments, the Texas
accountant said she was shocked when she confirmed in July that
the second-biggest U.S. gas producer was passing costs on to
her. For Thornton and thousands more owners of mineral rights in
the U.S., “no-costs” in drilling leases has taken on new
meaning.

As gas prices were heading toward a 10-year low in April,
Chesapeake began reinterpreting in its favor thousands of
contracts with landowners from Pennsylvania to Texas that own
the 1 trillion cubic feet of gas the company produced last year,
according to interviews and documents reviewed by Bloomberg.
Chesapeake, arguing that other contract language allows for cost
deductions, is fighting more than a dozen lawsuits.

“I don’t want to sound like I’m a bitter, disgruntled
royalty owner, but this isn’t fair,” Thornton said. “Don’t do
sneaky tricks. If it belongs to the royalty owners, it belongs
to the royalty owners.”

While Thornton hasn’t sued, saying she is dissuaded by the
potential hassle and cost, other property owners have taken
Oklahoma City-based Chesapeake to court in states including
Texas, Arkansas, Oklahoma, Louisiana and Kansas alleging
underpayment of royalties. The lawsuits include at least eight
cases brought so far this year, two of which were filed as class
actions seeking to represent multiple royalty owners....MORE

Obama Calls for 50 Percent Increase in Combined Heat and Power by 2020

An executive order signed by President Obama Aug. 30 calls
for increasing the use of combined heat and power 50 percent by 2020, shining a
spotlight on a “forgotten” energy resource that involves using heat produced
during electricity generation and other industrial processes.

In addition to establishing a national goal of deploying 40 more gigawatts of
combined heat and power from industrial sources in less than a decade, the executive order requires
federal agencies to coordinate with other parties to identify and encourage best
practice policies for industrial energy efficiency and combined heat and power
(CHP)....MORE

Here's the order via the White House. Oddly enough this version is not numbered.

Billionaire industrialist David Koch, who is helping steer millions
of dollars to elect Mitt Romney and congressional Republicans, on
Thursday told POLITICO he disagrees with the GOP’s stance on gay
marriage and believes the U.S. needs to consider raising taxes to
balance the budget.

Romney opposes gay marriage, as do most Republicans, and when that
was pointed out to Koch, he said “Well, I disagree with that.”

Koch said he thinks the U.S. military should withdraw from the Middle
East and said the government should consider defense spending cuts, as
well as possible tax increases to get its fiscal house in order – a
stance anathema to many in the Republican Party....MORE

One of the highest paid officials in Bell,
fired at the peak of the corruption investigation that included a search
of his house, has sued the city for $837,000, including a payout for
329 unused sick and vacation days.
Eric Eggena was fired shortly after the salaries of the top rung of
municipal officials in Bell were made public. Eight former officials are
now facing criminal charges and, while Eggena is not among them, his
house was searched as the L.A. County district attorney's office built
its public corruption case.

"His name came up a lot during our investigation, and he certainly
received a suspiciously high salary," Deputy Dist. Atty. Max Huntsman
said.

When Eggena went to work for Bell in 2002 he earned $90,000 a year,
but his salary nearly tripled over the next eight years with his total
compensation swelling to $421,000 annually, in the top tier of city
officials nationwide.

In addition to his salary, the city paid the employee portion of
Eggena's Medicare and Social Security deductions, and he accumulated
double sick and vacation time, according to his contracts.
"I think it's simply outrageous," said Anthony Taylor, an attorney for Bell.

Eggena was one of several officials in Bell who received outsized
salaries and benefits, led by former Chief Administrative Officer Robert
Rizzo, whose compensation reached $1.5 million a year, along with 107
vacation days and 36 sick days a year.

Former police Chief Randy Adams, whose salary of $457,000 a year made
him one of the highest paid law enforcement officials in the nation,
also has sued the city for severance pay....MORE

What does it take to earn admission into Y Combinator, Silicon Valley’s
oldest and most prestigious startup incubator? A new book that followed a
batch of startup founders from admission to demo day takes a look
behind the scenes at Paul Graham’s startup institution.

It seems like incubator and accelerator programs are a dime a dozen these days. But it was Y Combinator, co-founded in 2005 by investor Paul Graham,
that paved the way for these other programs, proving its success with
the incubation of companies like AirBnB and Dropbox. So what’s the
secret to Graham’s success and what does it take to earn admission to
his storied program?

Launch Pad doesn’t reveal many shocking secrets about the
program — much of the wisdom about how YC works is probably already
well-known to avid readers of Quora or Hacker News. And most of the interesting quotes from Graham on his startup philosophies come from his published essays available online.
But the book does provide an interesting glimpse into the mentorship
style of the YC partners, and shows just how many companies and founders
have actually successfully come through YC’s doors. To me, it’s
remarkable how many of those startups struggled mightily during the
first three months to come up with a solid idea, and how many pitch
ideas at demo day that are only a few weeks old. The book is as much a
story of the startup struggle as it is a profile of Graham or his
organization.

So what are some of the interesting nuggets from the book? Here are a few that caught our eye:

Forgo the hipster city: Graham tells
the founders to live in Mountain View, even if it’s boring, because the
proximity to YC is a key to success. He tells them they can go be
hipsters in San Francisco once demo day is over.

24/7: Graham recommends that founders dedicate all
their time to programming, sleeping, eating, and exercise. His wife and
co-founder Jessica Livingston
notes that a few particularly successful founders each lost 15 pounds
eating Lean Cuisine and playing tennis when they weren’t working.

Lack of ladies: Only four percent of founders
through YC’s winter 2011 class were female, Livingston estimated. Only
two of the 160 summer 2011 batch were female. Graham attributes this to
several things, including the idea that boys are more likely to begin
hacking as young children than girls are, that fewer female founders
apply to the program, and that founders are most likely to co-found with
friends, who are likely to be of their same gender. When the book was
written, six years after YC was founded, only one group of co-founders
out of more than 300 funded were entirely female.

Thursday, August 30, 2012

The insurers with the largest Gulf exposure are State Farm and Allstate. Alfa also has some market share but they're a mutual, as is State Farm, so no speculative plays.
Chubb, which is so large on the Atlantic coast has very little Gulf share.

From the Wall Street journal's Deal Journal:

Estimates of what Hurricane Isaac will cost the insurance industry are
starting to roll in, and early returns show the price tag will be a
relatively modest one compared to past storms that have struck the Gulf
Coast.

Disaster-modeling company Eqecat told Dow Jones Newswires this
morning that property-casualty companies will be on the hook for between
$500 million to $1.5 billion in onshore claims costs. Rod Fox, CEO of
reinsurance broker TigerRisk Partners, estimated the finally tally with
be between $1 billion and $2 billion.

The bulk of the cost will be borne by primary insurers like Allstate CorpALL-0.56%. and Travelers Cos. instead of the companies those insurers turn to for backup protection, reinsurers like Swiss Re AG SREN.VX-0.17% or Munich ReMUV2.XE-0.81%.
Some smaller regional insurers may reach claims levels that allow their
reinsurance protection to kick in, Mr. Fox said, but generally
speaking, losses for reinsurers will be “minimal.”...MORE

Egyptian nuclear ambitions were discarded following the
1967 defeat at the hands of Israel. Egypt signed the Nuclear
Non-Proliferation Treaty in 1968 but delayed ratifying it, presumably
because it had evidence that Israel had embarked on a nuclear weapons
program • Ehud Barak: Israel doesn't see Egypt working toward a military
nuclear program.

Egypt is considering reopening its nuclear
energy program, President Mohammed Morsi told a group of Egyptian
expatriates living in China on Wednesday evening.

"Cairo is considering anew the Egyptian
nuclear program, which will be purely for civilian purposes, to provide
clean energy to the citizens of Egypt," Morsi said. He was in China on
an official visit before traveling to Iran to attend the Non-Aligned
Movement summit in Tehran.

Responding to the report, Israeli Defense
Minister Ehud Barak told Army Radio on Thursday morning that there were
"many nations" that had civilian nuclear energy programs, and that
"Israel doesn't see Egypt working toward a military nuclear program."...MORE

There is at least one person who disagrees with the Israeli Defense Minister.
From the Middle East Media Research Institute (MEMRI):

Shenzhen, where some of China's largest electronics
manufacturers are located, looks set to have its minimum wage hiked
by 13.3 percent from 2013, in a move that could cause a ripple
effect across the world's major technology companies.

Apple, HP, Samsung and Nokia are among the companies that have
parts and products manufactured in the Guangdong province city, so
the wage rise, reported
by Digitimes, could impact the cost of computers, handsets
and games consoles worldwide. Among the companies based in the
city's Pearl River Delta tech hub, many of them
Taiwanese OEMs (Original Equipment Manufacturers), BYD Company
produces handsets for Nokia and HTC, while Shenzhen-based Wistron
signed a patent deal with Microsoft in 2011 to supply its
Android and Chrome products.

Rising costs in China have fuelled a string of protests from
workers in recent years, with strikes by manufacturing
employees rapidly increasing
between May and July 2012. Shenzhen's local authorities are
tempering possible worker action with the rise, which raises the
basic pay from about £149 to £169 a month in early 2013. Shenzhen
already boasts one of the country's highest minimum wage rates,
falling just short of Beijing....MORE

And from TechInAsia:Why the 2013 Minimum Wage Hike in Shenzhen, China’s First Tech Hub, is Not That Scary

The hi-tech manufacturing hub around the city of Shenzhen, in southern China, is set to be hit with a rise in the minimum wage of 13.3 percent in 2013. According to Wired, that could cause something of a shockwave through gadget manufacturers in that area – Taiwanese OEMs like Foxconn [1],
for example, which does the final assembly of so many Apple products –
that might result in inflated costs for the phones, tablets, and other
gadgets we love to buy.

But after weighing up the figures and
considering the changing manufacturing landscape in China, we don’t
think this’ll make too hard an impact on consumers. For one, Shenzhen
saw its minimum wage go up in February this year already, by 13.6 percent, to stand at 1,500 RMB (US$236) per month. The anticipated hike for 2013 shouldn’t be a surprise, as the China Dailypoints out
that, “Local governments are required to raise their minimum wage
levels at least once every two years.” If it does rise 13.3 percent next
year, probably again in February during Chinese New Year, then it’ll
stand at 1,700 RMB ($268).

Other factors come into play, too.
Shenzhen is not quite the manufacturing hub that it once was, and it
seems that the international media haven’t yet followed the trail of
gadget guts to newer tech hubs in, say, Jiangsu province in eastern
China – where a great deal of Samsung, Apple, and Nokia components are
made – or to much poorer inland areas where land and labor costs are
significantly lower. And so minimum wages in other regions of the
country are more of a factor than ever before....MORE

October futures are up .008 at $2.693. Speculators appear to be focusing on the mini-heat-wave expected over the next few days.
They should probably focus on the production side rather than consumption
The market had been looking for 60-62 Bcf. This is the first time in weeks that injections have been this high and give some indication of how high production remains.

Released: August 30, 2012 at 10:30 a.m. (eastern time) for the Week Ending August 24, 2012.
Next Release: September 6, 2012

...Summary
Working gas in storage was 3,374 Bcf as of Friday, August 24, 2012,
according to EIA estimates. This represents a net increase of 66 Bcf from the previous week.
Stocks were 429 Bcf higher than last year at this time and 361 Bcf above
the 5-year average of 3,013 Bcf. In the East Region, stocks were 109 Bcf above
the 5-year average following net injections of 47 Bcf. Stocks in the Producing Region were 189 Bcf above
the 5-year average of 935 Bcf after
a net injection of 16 Bcf. Stocks in the West Region
were 63 Bcf above the 5-year average after a net addition of 3 Bcf. At 3,374 Bcf,
total working gas is above the 5-year historical range.

Working gas stocks in the Producing Region, for the week ending
August 24, 2012, totaled 1,124 Bcf, with 227 Bcf in salt cavern
facilities and 897 Bcf in nonsalt cavern facilities. Working gas stocks
increased 9 Bcf in the salt cavern facilities and increased 7 Bcf in the
nonsalt cavern facilities since August 17. An historical series of the
salt and nonsalt subtotals of the Producing Region is available for
download at: wngsr_producing_region_salt.xls.

Here's another of those "Oh, that can't be good for the longs" charts:

Burj Khalifa firm eyes another record by building world’s tallest statue

The Statue of Unity for Sardar Patel, one of founding
fathers of modern India, will be 54 meter higher than the current record
holder, the Spring Temple Buddha statue in China. (Photo courtesy of
statueofunity.in)

The management firm that built world’s tallest building, Burj
Khalifa, is eying another record by planning to erect the world’s
tallest statue.

The U.S.-based firm, Turner Project Management, signed a $450
million-contract on Tuesday to build the 182-meter-high Statue of Unity
in the middle of Narmada River and opposite of one of world’s biggest
dams in Western India, The Times of India reported.

The statue will be of Sardar Patel, one of founding fathers of modern India, also named as “Iron Man of India.”

“The life of a man, as great as
Sardar Patel, is something that India cannot simply afford to fade away
into pages of history,” read a statement on the Statue of Unity’s
website, (http://statueofunity.in/monument.htm)....MORE

The United States has slid into eight recessions
in the last fifty years. Each time, the Federal Reserve sought to
revive economic activity by reducing interest rates (see chart below).
However, since the end of the last recession in June 2009, the economy
has continued to sputter even though short-term rates have remained near
zero. The weak recovery has led some commentators to suggest that the
Fed should push short-term rates even lower—below zero—so that borrowers receive, and creditors pay, interest.

One
way to push short-term rates negative would be to charge interest on
excess bank reserves. The interest rate paid by the Fed on excess
reserves, the so-called IOER, is a benchmark for a wide variety of
short-term rates, including rates on Treasury bills, commercial paper,
and interbank loans. If the Fed pushes the IOER below zero, other rates
are likely to follow.

Without taking a position on either the
merits of negative interest rates or the Fed's statutory authority to
fix the IOER below zero, this post examines some of the possible
consequences. We suggest that significantly negative rates—that is,
rates below -50 basis points—may spawn a variety of financial
innovations, such as special-purpose banks and the use of certified bank
checks in large-value transactions, and novel preferences, such as a
preference for making early and/or excess payments to creditworthy
counterparties and a preference for receiving payments in forms that
facilitate deferred collection. Such responses should be expected in a
market-based economy but may nevertheless present new problems for
financial service providers (when their products and services are used
in ways not previously anticipated) and for regulators (if novel private
sector behavior leads to new types of systemic risk). This post
supplements an earlier post in Liberty Street Economics that reviewed possible disruptions that could result from zero interest rates.

Cash and Cash-like ProductsThe
usual rejoinder to a proposal for negative interest rates is that
negative rates are impossible; market participants will simply choose to
hold cash. But cash is not a realistic alternative for corporations and
state and local governments, or for wealthy individuals. The largest
denomination bill available today is the $100 bill. It would take ten
thousand such bills to make $1 million. Ten thousand bills take up a lot
of space, are costly to transport, and present significant security
problems. Nevertheless, if rates go negative, the U.S. Treasury
Department’s Bureau of Engraving and Printing will likely be called upon
to print a lot more currency as individuals and small businesses
substitute cash for at least some of their bank balances.

If
rates go negative, we should also expect to see financial innovations
that emulate cash in more convenient forms. One obvious candidate is a
special-purpose bank that offers conventional checking accounts (for a
fee) and pledges to hold no asset other than cash (which it immobilizes
in a very large vault). Checks written on accounts in a special-purpose
bank would be tantamount to negotiable warehouse receipts on the bank’s
cash. Special-purpose banks would probably not be viable for small
accounts or if interest rates are only slightly below zero, say -25 or
-50 basis points (because break-even account fees are likely to be
larger), but might start to become attractive if rates go much lower....MORE

Broad describes the construction technique as “the most profound
innovation in human history”. Others wonder if “reckless” might be more
apt. But Broad is deadly serious and, having completed a reassuringly
solid 30-storey building in a mere 15 days last year, maybe its skyscraper dream is not so crazy after all.

If built, Broad’s tower will reach 838 metres – 10m higher than the world’s current tallest building, Dubai’s Burj Khalifa.
While the Burj took nearly six years to complete, Broad wants to build
its 220-storey skyscraper at a rate of about two storeys a day.

Since announcing the plans in June, Broad has encountered heavy
scepticism, with questions about whether it will be able to obtain
government approval, funding and, last but not least, the technical
expertise needed for such an ambitious project.

But in an interview with the Financial Times, Zhang Yue,
Broad’s chairman, said all the pieces were coming together. He said
financing was in place, architects were putting the finishing touches to
the blueprints, engineers were producing a model for earthquake tests
and construction was slated to begin in December.

One local investor, speaking on condition of anonymity, said he
doubted that Zhou Qiang, Communist party chief of Hunan province where
Broad is based, would sign off on the skyscraper plans because the risks
of a disaster were just too great....MUCH MORE

Wednesday, August 29, 2012

The front futures traded modestly below the lower end of our Aug. 9 target for the first time today.
First up, today's action via FinViz:

The bet would be that the gap gets filled before any concerted up-move but with the injection report tomorrow, who knows.
A 5.5 cent spike like today's can really wreck a short's day.

More tomorrow.

And from the Wall street Journal's Ahead of the Tape column:Natural Gas Unlikely to Weather Its Glut

Even a hurricane can't provide a breath of fresh air for natural-gas prices.

Time was, a storm like Isaac would shut down gas supply around the
Gulf of Mexico, causing prices to spike. They hit their highest ever,
about $16 a million British thermal units, soon after hurricanes Katrina
and Rita in 2005.

But the boom in onshore shale-gas production has diminished storms'
disruptive power: Offshore wells deliver less than 6% of U.S. output
today compared with about 16% then. Far from spiking, gas futures have
dropped 18% this month to under $2.70.

Thursday's report from the Department of Energy on the level of gas
inventory likely will confirm that it will take more than bad weather to
clear the prevailing glut. Analysts estimate about 60 billion cubic
feet of gas was injected into storage in the week ended Aug. 24. That
would be on par with the five-year average.
Price bulls need injections to be much lower....MORE

New
limited edition Campbell's tomato soup cans with art and sayings by
artist Andy Warhol are displayed in front of an original Warhol Pop Art
painting from the 1960's in the boardroom at Campbell Soup Company in
Camden, N.J.

Thanks to a reader for the tip.
Vote for Obama and you'll get economic stagnation combined with a weird urge to rule* rather than govern.
Vote for Romney and you'll get the tax cuts and deficits as far as the eye can see.

Faux argues that by the mid-2020s, even with the most optimistic
assumptions about economic growth, current trends indicate that the
average American’s wages will drop about 20 percent. One big factor is
that more and more good jobs will go overseas, leaving even America’s
best and brightest no alternative but to enter the service industry.

“You go into an Apple store and you see the future,” Faux said. “The
future’s not in the technology—the future of the labor force is all in
those smart college-educated people with the T-shirts whose job is to be
a retail clerk for Chinese goods.”

One impetus for job growth,
Faux writes in his book, is that as the super-rich get even richer,
they’ll need more and more servants:

They
will hire people to take care of their large homes and to tutor their
children in Chinese, tennis, and sophisticated strategies for getting
into the best private schools and universities. They will hire personal
assistants to shop, pay their bills, and run their errands. Coaches will
come to their homes to instruct them in physical fitness, mental
relaxation, and spiritual transcendence. They will need maids, cooks,
and gardeners.

Using Science to Improve the Lives of the RichAt Long or Short Capital LLC, we leverage our superior intellect and extensive investing experience to recommend explicit Long or Short
positions and related abstract trades, which may or may not be possible
with real world financial derivatives. We use science to improve the
lives of the rich.*Via Brainyquote

Given the daunting challenges that we face, it's
important that president elect Obama

is prepared to really take power
and begin to rule day one.

-Valerie Jarrett

Co-chair, Obama-Biden Transition Project

Nov. 9, 2008

Ms. Jarrett is currently Senior Adviser to both the President and First Lady.

Shares of Sealed Air (SEE) are trading solidly higher this morning
following the company's announcement that its Chief Executive Officer,
William Hickey, plans to retire in March.

Management said that Jerome A. Peribere, a veteran from Dow Chemical Co.
(DOW), would enter as Hickey’s successor. Traders seem to like the move
and are bidding shares higher today.

Calls are also active on the name. The October $15.00 call is seeing the
majority of the action with over 3,800 contracts traded on open
interest of just 2,632. Buyers have been coming after the offer all
session....MORE

Russian naval vessels have unexpectedly departed the Syrian
Mediterranean port of Tartus and Russian arms shipments to Syria have
been suddenly discontinued. debkafile’s
military sources reveal that those and other steps indicate that the
Russians are rapidly drawing away from the Syrian arena to avoid getting
caught up in the escalating hostilities expected to arise from military
intervention by the US, Europe and a number of Arab states. Russian
intelligence appears to have decided that this outside intervention is
imminent and Moscow looks anxious to keep its distance for now.

According to our military and Russian sources, these drastic steps must
have been personally ordered by President Vladimir Putin. He is
believed to have acted over the objections of some of his army and naval
chiefs. This would explain the mixed statements issuing from Moscow in
recent days about the disposition of Russian personnel at the naval base
in Tartus and Russian military personnel in Syria....MORE

The stock is up 7% at $11.50. We have fond memories of this one, on both the long and short sides.
From Schaeffer's Research:

Rare earth producer Molycorp, Inc. (NYSE:MCP)
is in a brutally severe downtrend since peaking near $870 in spring of
2011. Shares are down more than 53% year-to-date, and 80%
year-over-year. On Monday, MCP made a 52-week low at $9.40.

This summer we have seen an acceleration of this downtrend. Prices
have broken down from a long-term channel, as seen below on the weekly
chart. This can sometimes indicate an exhaustion of the current trend.
Combining this observation with the enormous spike in volume (green
circle on the volume bar) two weeks ago may lead to a bottom.

Now, it would be an understatement to say the company has had a
string of disappointing earnings and revenues, but sometimes "it's
always darkest before the dawn." The following bullet points will try
to convey the technical, as well as the sentiment, picture for shares of
MCP.

A spike in volume may be an indication of a bottom, as older
owners of MCP basically capitulate their shares to new shareholders.

Shares spent a few days last week under the round-number $10 level
before gapping higher on Tuesday, leaving an island-type reversal.

Significant gap resistance between $13 and $16 from the company's Aug. 2 earnings report may be a short-term issue for shares....MORE

I know John Kennedy said "The farmer is the only businessman in our economy who has to buy
everything at retail, sell everything at wholesale, and pay the freight
both ways." but I also know that farmers find more things to bitch about than any group I can think of.

From Agrimoney:

Farmers are cautious over the ability of grain and oilseed
prices to stay near record highs, and the impact of US drought on profits, prompting
a continued reluctance to commit in advance to fertilizer purchases, PhosAgro said.

The phosphates and nitrogen group said that demand for
nutrients had proved "strong" in the first half of the year, boosted towards
the end of the period by the return of India, the top importer, to buy-ins.

However, this disguised a trend among primarily US and
European growers to delaying purchased "until the actual application season started".

Sensitive period

In part this is due to concerns over the ability of prices
to maintain their rally, which has driven Chicago corn and soybean futures to
record highs.

Farmers were badly caught out in 2008 by a collapse in crop
values as the global recession hit, hurt in part by inventories of fertilizers
they had built-up at high prices, which tumbled too.

The concerns chime with worries among Chicago investors too
that futures may repeat their declines of last year, when corn prices tumbled
28% from a late-August peak as funds sold-off.

Mike Mawdsley at broker Market 1 said: "Funds are long. If
they choose to leave markets can go down.

"Last year we lost $2.27 a bushel in corn and $3.13 in
soybeans between the end of August and the first part of October."...MORE

The worst U.S. drought in more than five decades is forecast to raise
farm profits to a record $122.2 billion this year as higher prices and
insurance payments outweigh crop losses from the dry conditions. Income
will rise 3.7 percent from a revised $117.9 billion in 2011, the U.S.
Department of Agriculture said. The forecast is up from $91.7 billion in
February. The value of crops will rise 6.7 percent to $222.1 billion,
an all-time high, while revenue from livestock sales will decrease 0.1
percent to $165.8 billion, the USDA said. Expenses such as diesel fuel
and animal feed will increase 6 percent to $329.1 billion....

This may be one of the biggest stories of the year.
From The Australian:

Iron ore price continues to slide as Chinese steel mills solder on

AN expected iron ore price floor
that miners have long been flagging could be a long way off, with prices
of the steelmaking ingredient continuing to slump amid talk that China
is subsidising high-cost iron ore production.
Prices of iron ore, Australia's biggest export, have fallen 30 per
cent in the past two months and are down the same amount from the price
on which the government's commodity forecaster bases its most recent
forecast of $66.9 billion of 2012-13 iron ore revenue. The price
collapse threatens to put a huge hole in federal government company and
mining tax incomes and West Australian royalty earnings.

It has
also sent share prices of iron ore miners Fortescue Metals Group and
Atlas Iron plunging to three-year lows. Rio Tinto shares threatened to
fall below $50 yesterday, down $1.21 to $50.54 compared with $68 six
months ago.

Yesterday, the iron ore price at closely watched The
Steel Index fell to a fresh 2 1/2 year low as Chinese steel mills
continue to run down stockpiles and high-cost Chinese mines that were
expected to stop keep digging ore.

Prices fell $US4.60 to $US94.80 in their 17th fall of the past 18 trading days.

The
notion of a price floor at about $US120 a tonne, where high-cost
Chinese production should have become unprofitable, has previously been
pushed by Rio chief Tom Albanese and Fortescue chief Nev Power and
others. But prices fell through that level about a month ago and have
kept sliding....MORE

Rio Tinto's ADR's are trading down 3% in New York while the chairman of Fortescue makes a splash:

Energy investors
have taken bets for years on what they thought was an important
indicator of future energy production: the weekly rig count data
provided by oil service firms.

They may want to be careful about how much money they put on the table.

A
Reuters analysis of the data, and interviews with officials at
companies involved in collecting and compiling it, shows that it may
sometimes be an arbitrary and misleading gauge subject to revisions.

The
culprit appears to be the fracking boom and the complex geology that
has made it much more difficult to decide whether a rig is likely to
discover oil or gas in large quantities, often leading companies to rely
on guesswork when drilling begins.

At
stake is not only the direction of U.S. natural gas prices, but the
credibility of U.S. energy companies desperate to show investors that
they are drilling for more oil -- which is near $100 a barrel -- and
less gas, the price of which remains depressed at near a decade low.

Equity
analysts need to know what a company is likely to produce to predict
its profits; gas traders are desperate to anticipate any let-up in the
unrelenting gush of supplies.

To
understand potential flaws in the data, a glance at Chesapeake Energy's
rigs in west Oklahoma provides some clues. On January 8 this year, the
energy company's subsidiary Nomac began drilling Ogle well 9-11-18 in
the Granite Wash Basin, one of many shale patches across the country
that are now gushing an often unpredictable mix of oil, liquids and
natural gas.

Chesapeake had listed
the well as "oil/gas" with state regulators, a common practice. But that
was not the assessment of Smith Bits, a Schlumberger subsidiary that is
one of two main firms that gather data on nearly 2,000 U.S. drilling
rigs and provide it on a weekly basis to the industry and markets.

Based
on their own assessments, Smith Bits determined the Ogle rig, and 21
other Chesapeake rigs drilling new wells in the area, to be gas rigs,
and marked them as such in their January 20 report, which is used by
traders and company analysts as an important signal of oil and gas
output in the coming months....MORE

Understanding the gradations of storage, hoarding and market corners goes a long way to understanding commodities pricing. In the case of solar and wind, without storage they don't make economic sense and so are dependent on and corrupting of, politics.

On that front, one of the problems of the Obama administration's approach to renewables is that Secretary Chu, Science Advisor Holdren, Majordomo Valerie Jarrett and a whole bunch of rentseekers decided that batteries are the way to go.

What if, despite the losses from conversion, it makes more sense to store the energy as thermal or kinetic or even compressed spring energy?

The A123 fiasco is an example of government picking winners rather than providing the conditions where winners can emerge.

From Bloomberg:Ski Lifts Help Open $25 Billion Market for Storing Power

Technology developers are shuttling
between caves and mountaintops to build a market for utilities
set to attract $25 billion in annual investment within a decade.

To store surplus electricity from power plants, they’re
trying to squeeze air into salt mines and run empty trains up
hills, testing how to harness the energy released when the air
bursts out and the cars roll back down. Trials are under way at
companies from Germany’s Siemens AG (SIE) and RWE AG (RWE) to General
Electric Co. (GE) and a startup backed by billionaire Bill Gates,
which is experimenting with the momentum of ski lifts.

“Electricity is the only commodity in the world that isn’t
really stored,” said Prescott Logan, who heads GE’s storage
business in Schenectady, New York, where last month it opened a
$100 million plant to make batteries for utilities. When storage
becomes cheap and massive, “the impact will be huge.”

The $260 billion renewables industry needs storage so power
companies can absorb surges from solar and wind farms from Texas
to Mongolia. The devices will be key for plans by Germany to
shift Europe’s biggest electricity market from atomic energy,
said Gil Forer, Ernst & Young LLP’s clean-tech head in New York.

The consulting firm said annual investment in storage is
currently about $2.6 billion, based on data from Pike Research.
That’s set to grow to $9.2 billion in 2015 and then to $25
billion by 2021. Logan said Fairfield, Connecticut-based GE
expects energy storage to generate $500 million to $1 billion in
annual revenue by 2020.

Brad Roberts, executive director of the Electricity Storage
Association in Washington, said the business in the U.S. alone
may grow to $5 billion within five years.

Water Uphill
While pumping water up a hill has aided in power generation
for more than 100 years, the technology is limited to
mountainous terrain. Environmentalists have criticized those
sites for being harmful to local wildlife, prompting developers
to look for alternatives that can be used anywhere anytime....MORE

Prices and supply are at the point that building out the distribution infrastructure, including the "last mile", makes sense on the East coast.
From Platt's:

Bloomberg doubles down on natural gas for New York City Washington

Continuing his campaign to back natural gas as the fuel of choice for
his city, New York Mayor Michael Bloomberg released a study late Monday that
showed New York needs natural gas to make complete its conversion away from
heavy heating oil use in the city.

The study by ICF International notes that by 2030 New York City's two
local distribution companies -- ConEd and National Grid -- will have to
reserve more capacity on interstate pipelines as well as make full use of
1.13 Bcf/d worth of new pipe coming to the city-gates to keep the city
supplied.

In April 2011, the city passed a set of regulations that phases out the
use of No. 4 and No. 6 heating oils in building boilers by 2030, to be
replaced by biofuels, No.2 fuel oil and natural gas. ICF estimates the full
conversion will increase the average daily gas send-out by the two LDCs by
16%, or 160,000 Mcf/d on a normal day, jumping 30% to 560,000 Mcf/d by 2030.

In 2009, New York City burned 1.3 Bcf/d on an average day, climbing
to 2.5 Bcf/d on peak days in summer and winter, ICF said.

New York City's difficulty, even with the completion of Houston-based
Spectra Energy's 800,000 Mcf/d New Jersey-New York pipeline from Jersey City
to Manhattan, and two Williams pipeline improvements accounting for 350,000
Mcf/d of natural gas, is that demand for gas will increase 1.1%/year through
2030 while available supply capacity will increase less than 1%/year, ICF
said....MORE

Tuesday, August 28, 2012

Long-term prediction is hard, but researchers are on the case Steven Cherry: Hi, this is Steven Cherry for IEEE Spectrum’s “Techwise Conversations.”
Where will you be tomorrow at 6 p.m.? You probably know, right?
Short-term predictions are easy. Where will you be five months from now
at 6 p.m.? Well, if it’s Christmas Day, you might know, but what if it’s
the week before? You probably don’t, and probably neither do your
friends and family and coworkers.
Long-term prediction is hard.

In fact, it turns out to be very hard. The usual prediction models
break down entirely, and new mathematical techniques are needed.

And needed they are, because there’s a lot of utility to being able to
make those predictions, whether you’re a credit card company trying to
detect fraud in an individual account or a highway-traffic engineer
deciding when to schedule a road repair.

Steven Cherry: First of all, what is the use of long-term prediction, and were those good examples that I gave?Adam Sadilek: Yeah, you alluded to a lot of those
examples already. Like one is infrastructure planning. If we have a good
idea where everybody is going to be two years from now, we can plan
building roads better, for example. Another application is peer-to-peer
package delivery system, where instead of having dedicated mail
carriers, you can actually use the general population to deliver
packages, and then you can use a system like Far Out to see where are
these people most likely to meet so they can exchange these packages and
then route them to the final destination. Another component that
actually my colleague at Microsoft already explored is to use long-term
prediction to have an intelligent thermostat in your home. So if the
thermostats understand your location, it can either preheat or cool down
the house based on how likely you are to get home.

Steven Cherry: Very good. So how good are short-term predictions? And why can’t those same methods be used for long-term predictions?Adam Sadilek: Short-term predictions are myopic, so
they look at a very specific localized context. They usually take your
past few locations plus some real-time aspect of your current context,
and they evolve that one or two steps into the future, and that gives
you prediction for the next hour, the next day. But as you force these
systems to evolve further and further into the future, they become less
and less precise. They diverge and eventually become worse than even a
random predictor, because they’re not designed for that purpose. With
Far Out, we take a more global view of people’s location data, and for
each person we learn a library of prototypical days which we call
eigendays, and these eigendays have the property that they
capture the dependable repeating components of people’s location signal,
and they filter out the transient and undependable aspects of human
mobility....MORE

Russell Wasendorf Sr.’s new bride is seeking an annulment, claiming
their union, like so many bogus bank statements, was a fraud.

The
Peregrine Financial Group founder and Nancy Paladino had been engaged
since winter, and they had planned an August wedding at a Cedar Falls
church. But in a surprise move, the two instead wed in Las Vegas, Nev.,
June 30.

Nine days later, Wasendorf Sr., 64, attempted to kill
himself behind the PFG offices in Cedar Falls, and the investigation
that followed resulted in federal criminal charges against him for
allegedly misleading regulators with phoney bank records and bankruptcy
for his commodities trading firm.

Paladino, of Lake Zurich, Ill.,
filed for an annulment in Clark County Family Court on Aug. 13, alleging
her consent to marry was obtained by fraud, according to court records....MORE

Argentina is definitely an interesting place.
From the cult of Juan Perón to the current president Cristina de Kirchner (Hey gang, let's nationalize private pensions!), from the Barings debacle* of 1890 to the hyperinflation of 1990 and the collapse of 1999-2002 there are a lot of lessons to be taught or learned....

From Reuters:

Argentine
President Cristina Fernandez's popularity sank to 30 percent in August,
less than half of what it was a year earlier, according to a poll
published on Sunday that portrayed a country worried about crime and
high inflation.

The telephone survey of 2,259
voting-age Argentines by polling company Management & Fit showed
dissatisfaction with the interventionist policies that won Fernandez a
landslide re-election 10 months ago.The
popularity of the 59-year-old Peronist -- who is part of a bloc of
left-leaning South American leaders including Evo Morales of Bolivia and
Rafael Correa of Ecuador -- fell by 8.1 percentage points between
August and July alone.

The international bond market has shunned Argentina
since its 2002 sovereign debt default and subsequent embrace of
policies that emphasize state intervention in the markets and heavy
government spending meant to stoke economic growth.

As
recently as September last year, a month before winning her second
term, Fernandez had 64.1 popularity while campaigning on promises of
deepening the interventionist policy model of her late husband and
predecessor as president, Nestor Kirchner.

Since
then the economy has slowed, and the poll suggests most people are not
buying Fernandez's argument that external factors, such as Europe's
financial mess, are mostly to blame.

Argentina's
economic activity was flat in June, according to the official EMAE
index, which is a close proxy for gross domestic product.

Of
those surveyed by Management and Fit, 44.5 percent said government
policy was the main cause of the stagnation. Only 8.0 percent blamed it
on spillover from sluggish world growth.

The
perception of an increase in street crime was first on the list of
complaints voiced by participants in the poll, which had a margin of
error of plus or minus 2.2 percentage points. No official crime
statistics were available to back this up....MORE

Chevron Corp.
CVX+0.70%
is hoarding the money it makes from oil and gas operations, prompting
investors to wonder if the energy giant is bracing for a spike in costs
or will use its $21 billion cash pile to buy a smaller rival.

The
company's cash level rose 60% over the last year. Chevron is now
carrying more cash on its balance sheet than any publicly traded energy
company—about 18% more than larger rival Exxon Mobil Corp.
XOM+0.43%
—and more than the market capitalization of most U.S. exploration
companies. Even if Chevron used the money to retire all its debt, it
would still have about $11 billion left over....

..."I wouldn't be surprised if [Chevron] took a look at companies
trading at a substantial discount," said Allen Good, a Morningstar Inc.
analyst.

Cash-strapped Chesapeake Energy Corp.,
CHK+0.16%
the nation's second-largest gas producer after Exxon, has been
discussed as an acquisition target since its largest shareholders—who
now effectively control the board—urged its management in May to
consider a sale at a rich enough premium.

Chesapeake's $12.7
billion stock-market value makes its vast oil and gas holdings look
cheap. But some experts say its complicated web of financings—and the
discount on its stock price, which could hinder agreement on a deal
value—make an acquisition less likely....MORE